i agree SFTBY, BABA/ some on alibaba/ before friday can yhoosftby offer more appreciation?
re;
Alibaba IPO Is a Bonanza for Select Firms/ 12:41p ET September 15, 2014 (Dow Jones) Print Alibaba IPO Is a Bonanza for Select Firms By Jenny Strasburg in London and Mia Lamar in Hong Kong
The initial public offering of Alibaba Group Holding Ltd. this week will be a windfall for a group of previously undisclosed investors who snapped up preferred shares in the Chinese e-commerce company that were sold in the run-up to its public debut.
Roughly two dozen investors bought convertible preferred shares in Alibaba through a little-noticed $1.7 billion private offering in 2012, including sovereign wealth funds, Asian hedge funds, one of the banks that sold the deal and other big investors, people familiar with the matter said.
Based on the expected price of the listing, which is on track for Friday, those preferred shares will have more than tripled in value, making the investors big winners in the expected $24 billion IPO.
The convertible preferred shares were part of a financing package Alibaba used to fund its $7.1 billion purchase of half of Yahoo Inc.'s 40% stake in the company.
The bulk of the funds came from bank loans and the sale of equity.
The preferred shares were offered to a select group of investors.
At the time of the Yahoo deal, Alibaba indicated it had a strong incentive to hold an IPO by the end of 2015.
The firm's rising valuation made an offering an attractive option, giving investors in the preferred shares a likely exit point. Given the company's fast growth rate, many investors were confident they could profit on the deal, people familiar with the matter said.
Among those about to reap big profits are two multibillion-dollar hedge-fund firms in Hong Kong--Janchor Partners Ltd. and Myriad Asset Management Ltd.--according to people familiar with their investments.
An investment firm affiliated with U.S. mutual-fund giant Fidelity Investments, Greenwich, Conn.-based hedge-fund firm Viking Global Investors and Singapore government-controlled funds GIC and Temasek Holdings Pte. Ltd., were also among the buyers, the people said. The firms declined to comment.
Morgan Stanley and Credit Suisse Group AG handled the sale of the preferred shares. Credit Suisse bought roughly $40 million worth and stands to make a profit of nearly $100 million, according to people familiar with the matter and calculations based on Alibaba filings.
Morgan Stanley didn't purchase shares in the deal, the people said.
Hong Kong-based representatives of Credit Suisse and Morgan Stanley declined to comment. A spokeswoman for Alibaba declined to comment.
A person close to the preferred-share sale process said that most of the roughly 70 fund managers invited to participate were approved by Alibaba based on relationships they already had with the company.
The Alibaba preferred shares will automatically convert to common shares at $18.50 when the IPO occurs, giving the owners a roughly 3.9% stake in Alibaba, valued as high as $6 billion, based on the expected IPO share price of $60-$66 a share.
At the time the shares were sold, Alibaba valued itself at roughly $40 billion, compared to $162 billion at the current expected price of the offering.
The financing that included the preferred shares was the last time Alibaba gave investors a chance to own a piece of the fast-growing company.
Since then, Alibaba has issued shares to pay for acquisitions and investors have traded shares in private transactions, but the company hasn't sold shares to investors directly.
Janchor and Myriad both took big bets on the deal relative to the firms' own sizes at the time. Janchor invested around $150 million of its $1 billion in assets, and Myriad invested around $100 million out of around $2 billion it managed, the people familiar with their investments said.
Their success with the deal should give the firms a boost.
Their performance will benefit, and the transactions are likely to burnish their reputations for getting access to coveted deals. Janchor Partners, a roughly $2 billion firm run by John Ho, the former Asia head of the Children's Investment Fund, is anticipating a $400 million windfall, people familiar with the matter said. Janchor raised money specifically aimed at buying the Alibaba shares in 2012, a person familiar with the matter said.
The firm was just two years old at the time.
Myriad, run by Carl Huttenlocher, a former Highbridge Capital Management portfolio manager, was even newer. It started trading in December 2011.
Both Janchor and Myriad ring-fenced their Alibaba investments, effectively walling off gains from investors who came later, people close to the firms said.
Inside Hong Kong's tight-knit circle of bankers, investors and funds, some managers who weren't invited to participate are complaining about being left out, according to people familiar with the conversations.
Former Goldman Sachs Group Inc. trader Davide Erro has complained to colleagues that as a big client of Credit Suisse, Turiya Advisors Asia Ltd., his $2.5 billion Hong Kong-based firm, should have been given a chance to buy the preferred shares, according to people familiar with conversations inside the firm.
Mr. Erro and Credit Suisse declined to comment.
Some investors said questions about Alibaba's corporate governance and a series of accounting frauds at Chinese companies made them wary of investing in the preferred shares.
"It wasn't for me," said one hedge fund manager who looked at the deal and passed. "This was another private sale in China where enforcement capabilities are extremely low."
Other big winners in the IPO include the company's founders and investors such as GIC and Temasek, which own stakes in addition to the preferred shares.
Other early investors are Japan's Softbank Corp., Yahoo, private-equity firm Silver Lake Partners and a unit of state-owned Chinese investment fund Citic Capital Holdings. Write to Jenny Strasburg at http://jenny.strasburg@wsj.com and Mia Lamar at http://mia.lamar@wsj.com
(END) Dow Jones Newswires September 15, 2014 12:41 ET (16:41 GMT) Copyright (c) 2014 Dow Jones & Company, Inc.DN201409150088432014-09-15 16:41:00.0007R7IL8DDAELHFK5M83OUCI8FN1DJNF
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